22 Important Verification Of Payee Facts Every Payment Service Provider Must Know

As a Payment Service Provider (PSP) that offers instant payment or credit transfers within SEPA, Verification Of Payee (VOP) compliance isn’t optional, it’s mandatory. 

Here are the important facts you need to understand about VOP to ensure your organization is prepared for this regulatory shift.

The Basics

1. VOP must be provided by Payment Service Providers (PSPs) free of charge to the payer, no exceptions, no additional fees.

2. The VOP scheme will officially enter into force on 9 October 2025. Mark your calendars!

3. VOP checks must be performed before the payer authorizes the credit transfer, making it a mandatory pre-authorization step.

4. The European Payments Council (EPC) oversees the development of the IPR framework governing VOP.

Regulatory Framework

5. VOP is mandated under the Instant Payment Regulation (IPR), an EU rule that standardizes instant credit transfers across member states.

6. The IPR requires compliance with a Union-wide set of rules and standards for VOP implementation, no country-specific variations allowed.

7. PSPs in non-Eurozone countries must comply with the VOP framework by July 2027.

8. The IPR mandates real-time confirmation of success or failure for payments.

Technical Requirements

9. The VOP verification process should be completed quickly, ideally within one second, to facilitate real-time payments.

10. The entire VOP process is designed to be completed within a maximum execution time of three seconds.

11. Implementation of VOP requires significant technical and operational changes for Payment Service Providers.

Critical Liability Shifts

12.  PSP of the payer fails to comply with VoP rules. If a defective execution occurs because the payer’s PSP did not perform VoP properly (e.g., no check, or no notification of mismatch):

• The payer’s PSP must refund the payer the full amount of the transaction without delay.
• The payer’s PSP may then seek compensation from the payee’s PSP or a Payment Initiation Service Provider (PISP) if their non-compliance contributed to the failure.

13. Payee’s PSP or a PISP fails to comply. If the error stems from the payee’s PSP (e.g., it provides wrong name data) or from a PISP:

• They must compensate the payer’s PSP for the refund it made to the payer.

14. Correct execution with proper VoP alerts. If the VoP check works correctly (i.e., the payer was shown a mismatch or “close match” warning) but the payer proceeds anyway:

• The liability stays with the payer.
•  PSPs are shielded if they fulfilled their VoP obligations.

15. No liability transfer if PSPs complied:

• If both the payer’s and payee’s PSPs (and any PISP) properly followed Article 5c obligations, then PSPs are not liable for losses arising from the payer’s decision.

Fraud Prevention Context

16. Global losses from APP scams could reach $331 billion by 2027 due to the increasing volume of digital payments.

17. APP scams exploit the speed and irreversibility of digital payments, making verification of the recipient’s name essential before payments are processed.

18. Compliance with VOP regulations is aimed at enhancing consumer protection and reducing fraud in payment transactions.

Implementation Landscape

19. Countries in Europe are at various stages of VOP integration, with the UK and the Netherlands being notable early implementers.

20. Your organisation must be prepared for the reality that different markets may have varying levels of readiness and technical sophistication.

Service Obligations

21. VOP represents a mandatory service upgrade that PSPs must absorb the costs for while maintaining competitive pricing.

The Bottom Line

22. VOP compliance is not negotiable. It’s a fundamental shift in how payment verification works, and PSPs who fail to implement it properly face direct financial liability for payment errors.

Ready for VOP Implementation?

These 22 facts represent the essential knowledge base every PSP needs to navigate VOP compliance successfully. With the October 2025 deadline approaching rapidly, the time for preparation is now.

Ozone API’s VOP solution provides ready-to-deploy, standards-compliant verification services that help PSPs meet all regulatory requirements while minimizing implementation complexity and ongoing operational burden. Get in touch to speak to us about our Verification Of Payee solution.